Golden State Transit Corp. v. City of Los Angeles

• Decision Date: 29 April 1983
• Docket Number: No. CV 81-1519-CHH.,CV 81-1519-CHH.
• Citation: 563 F. Supp. 169
• Court: U.S. District Court — Central District of California
• Parties: GOLDEN STATE TRANSIT CORPORATION, a California corporation, doing business as Yellow Cab of Los Angeles, Plaintiff, v. CITY OF LOS ANGELES, a municipal corporation, Defendant.

563 F. Supp. 169

GOLDEN STATE TRANSIT CORPORATION, a California corporation, doing business as Yellow Cab of Los Angeles, Plaintiff, v. CITY OF LOS ANGELES, a municipal corporation, Defendant.

No. CV 81-1519-CHH.

United States District Court, C.D. California.

April 29, 1983.

Simon & Sheridan, Thomas R. Sheridan, Michael R. Rogers, Los Angeles, Cal., Yaspan & Goch, Robert M. Yaspan, Michael Goch, Sherman Oaks, Cal., Alioto & Alioto, Joseph M. Alioto, San Francisco, Cal., Gray, Plant, Mooty, Mooty & Bennett, Daniel R. Shulman, Patricia A. Knipe, Minneapolis, Minn., for plaintiff.

Ira Reiner, City Atty., Thomas C. Bonaventura, Sr. Asst. City Atty., John F. Haggerty, Asst. City Atty., Los Angeles, Cal., for defendant City of Los Angeles.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CYNTHIA HOLCOMB HALL, District Judge.

The following Findings of Fact and Conclusions of Law are entered in support of the Court's grant of partial summary judgment to defendant on the Fifth Cause of Action alleging violations of section 1 of the Sherman Act.

FINDINGS OF FACT

Plaintiff Golden State Transit Corporation is engaged in the business of operating taxicab service in the City of Los Angeles, California. Defendant City of Los Angeles (the "City") is a municipal corporation formed under the laws of the State of California. Ordinances enacted by the City require plaintiff, and other taxicab companies seeking to do business within the City, to obtain City licenses in order to operate. City ordinances also subject plaintiff, and other taxicab companies operating in the City, to regulations relating to rates that passengers are charged and other conditions of business.

In March 1981, the Los Angeles City Council failed to renew plaintiff's operating franchise. Plaintiff has been operating without the licenses required by City regulations since April 1, 1981. This Court, per Judge Hauk, issued a preliminary injunction forbidding the City from terminating, or otherwise treating as expired, plaintiff's franchise. Golden State Transit Corp. v. City of Los Angeles, 520 F.Supp. 191 (C.D. Cal.1981), vacated, 686 F.2d 758 (9th Cir. 1982), cert. denied, ___ U.S. ___, 103 S.Ct. 729, 74 L.Ed.2d 954 (1983). Following the Supreme Court's denial of plaintiff's petition for writ of certiorari, this Court vacated the preliminary injunction. On March 28, 1983, plaintiff filed its Second Amended Complaint which repeats the Causes of Action set forth in the previous Complaints and adds a Fifth Cause of Action alleging violations of section 1 of the Sherman Act, 15 U.S.C. § 1. Following the filing of the Second Amended Complaint, the City voluntarily refrained from issuing a "Cease and Desist" order against plaintiff pending the Court's consideration of plaintiff's application for a preliminary injunction. The Court denied plaintiff's application for a preliminary injunction on April 28, 1983, and now enters Judgment in favor of defendant on the Fifth Cause of Action.

CONCLUSIONS OF LAW

Summary judgment is appropriate where the pleadings and other materials on file show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). On the instant motion, the parties agree that there are no disputes as to any material fact on the issue of Sherman Act immunity. In the absence of any factual issues, the Court may grant summary judgment to either party without requiring that a cross-motion be filed. Factora v. District Director, Immigration & Naturalization Service, 292 F.Supp. 518, 521 (C.D.Cal.1968).

Plaintiff's Fifth Cause of Action alleges that defendant has "engaged in a combination, contract, and conspiracy unreasonably in restraint of interstate trade and commerce" in violation of section 1 of the Sherman Act. Specifically, plaintiff points to the City's refusal to extend and renew plaintiff's taxicab franchise; its refusal to approve rate increases in the full amount requested by plaintiff; and its refusal to allow plaintiff to lease its taxicabs to independent contractors rather than hire employee drivers to operate them. Defendant does not dispute the assertion that it has imposed these restrictions on plaintiff's business; instead, it contends that it cannot be held liable for any damages that might result from its regulatory and licensing activities.

The threshold issue presented in plaintiff's Fifth Cause of Action is whether defendant enjoys the "state action" exemption from Sherman Act liability articulated in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and subsequent cases. As the Supreme Court recently stated in Community Communications Co. v. City of Boulder, 455 U.S. 40, 52, 102 S.Ct. 835, 838, 841, 70 L.Ed.2d 810 (1982):

Our precedents thus reveal that a municipal ordinance cannot be exempt from antitrust scrutiny unless it constitutes the action of the State ... itself in its sovereign capacity, see Parker, or unless it constitutes municipal action in furtherance or implementation of clearly articulated and affirmatively expressed state policy, see City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364; Orrin W. Fox Co. New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co., 439 U.S. 96, 99 S.Ct. 403, 58 L.Ed.2d 361, and Midcal Cal. Retail Liquor Dealers v. Medical Aluminum, 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233.

Community Communications makes it apparent that the requirement of "clear articulation and affirmative expression" requires a showing that the State's position is not one of "mere neutrality." In applying this test to the Colorado Home Rule Amendment, the Community Communications Court held that a guarantee of local autonomy alone did not affirmatively express a State policy to displace competition with local regulation.

A State that allows its municipalities to do as they please can hardly be said to have "contemplated" the specific anticompetitive actions for which municipal liability is sought. Nor can those actions be truly described as "comprehended within the powers granted," since the term, "granted," necessarily implies an affirmative addressing of the subject by the State.

102 S.Ct. at 843 (emphasis in the original).

In contrast to the statutory scheme at issue in Community Communications, the City of Los Angeles' regulatory authority stems from the Constitution and Public Utilities Code of the State of California. The California Constitution authorizes state regulation of taxicabs and their owners. Cal. Const., art. XII, § 4. The Legislature has asserted the power to control taxicab operations through enactment of Chapter 8 of the Public Utilities Code. Pub.Util.Code § 5351 et seq. Specifically, Chapter 8 applies to any "charter-party carrier of passengers," which includes "every person engaged in the transportation of persons by motor vehicle for compensation, whether in common or contract carriage, over any public highway in this State." Id., § 5360. Plaintiff's taxicab operations clearly fall within this definition of utilities subject to state regulation of fares and other...